American Oil and Gas Reporter - April 2020 - 79

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IssuesUpdate: Tennessee Oil & Gas Association
helps sponsor many of our events."
With a team of government relations
experts, Laine suggests Waller is well
suited to help TOGA with its primary responsibility, which he characterizes as
protecting the industry against adverse
rules, regulations and laws.
With a client service agreement in
place, Waller has assigned two staff members, Annie Beckstrom and Lauren Faulkner, to manage TOGA's day-to-day activities
and plan 2020 events. Beckstrom is an
attorney and registered lobbyist in Tennessee and will monitor and engage in
the Capitol as needed.
Years Together
According to Laine, Reiley had been
his assistant since they formed an association to represent the state's coal miners
in 2008 when they faced strong attacks
from the environmental groups. "Every
year the environmentalists would bring
back what they called the 'Scenic Vistas
Protection Act' that would have put the
coal miners out of business. By the seventh
year, we finally got it hammered down,"
Laine recounts.
Their work was recognized by members
of TOGA's board, who brought on Laine
as a lobbyist to push back in the statehouse
on the controversy swirling around hydraulic fracturing. Goodwin, who was
TOGA president at the time, later asked
Laine to add association president to his
roster of responsibilities.
According to Laine, the association
succeeded in helping add fraccing rules
to the state's regulations where none existed. "When we found out Tennessee
did not have rules specific to fraccing,
we knew that the environmentalists would
be all over us, saying the oilmen would
go crazy and do whatever they wanted,"
Laine comments. "They easily could have
shut us down if we didn't get something
in place."
With the board's assent, Laine convinced TDEC to convene a working group
consisting of industry, regulators and environmentalists, to draft the new fraccing
regulations. "Once we got a resolution
through the House, we stayed on it for
the next year to keep it moving," Laine
recalls. "It was important to not let it sit
on anyone's desk."
Celebration of the industry's success
in heading off a potentially disastrous
regulation was short-lived. Within months,
oil prices went into a tailspin and several
member companies not headquartered in

Tennessee departed. "These days, our
members are mostly those who have always been around," Laine observes.
That is not to say there is no action in
the state's oil fields. "We are seeing ongoing activity in Overton and other counties in northeast Tennessee," he notes.
TDEC records indicate all permits issued by TDEC since January 2019 have
been for wells in either Overton, Fentress,
Clay or Pickett Counties. Tennessee remains a resource-rich state, Laine indicates,
and regardless of the price slump, he
predicts natural gas demand will remain
strong in the long term. To meet that demand, he says, operators in the Volunteer
State will benefit from continued prospecting and by taking second and third looks
at previous producing regions. Tennessee's
advantages for producers include the
availability of untapped gas resources,
and-although space is tight-access to external markets through interstate pipelines,
Laine assesses.
TOGA will continue working in the
interests of Tennessee operators, he emphasizes. It will do so by continuing to
interact with state executives and regulators, supporting legislation with positive
impacts while opposing harmful bills and
providing high-value, low-cost solutions
that help members find more oil and gas.
Abandoned Wells
Like many states with a long history
of oil and gas production, Tennessee continues its efforts to reduce the number of
abandoned wells that dot state maps. In
the meantime, the presence of abandoned
wells-of which state records say there
are 1,980-tends to draw attention.
Last fall, a study published by the
University of Tennessee warned that
groundwater risked contamination in areas
of the state with older wells drilled prior
to existing regulations. It claims that the
greatest risk of that lies in eastern and
northern Tennessee, but notes that since
groundwater is not a primary drinking
water source in those areas, "the human
population is not greatly affected."
Instead, the study recommends, TDEC
should focus on plugging abandoned
wells in certain middle Tennessee counties
where contaminated groundwater poses
the greatest potential hazard. In her new
role as Oil and Gas Supervisor, Reiley
oversees the department's abandoned well
program. She reports that last year, TDEC
managed several contracts for well plugging and that 155 abandoned wells were

properly plugged. Although contracts are
not yet in place, she says the department
plans to plug a similar number this year.
At TOGA's last convention, the Board
of Directors said it would pursue legislation
to direct a portion of severance tax revenue
to an abandoned well fund. Although no
action was taken in the legislature, Laine
says the issue remains open for discussion.
Otherwise, this year's legislative session
has been quiet, with few harmful bills,
he describes.
This year, TOGA's priorities are to
continue to "promote the oil and gas industry, monitor legislation, look for ways
to find more oil while saving money,
generally get along with our regulators
and stay out of 'gotcha' range," Laine
confirms. "If we are doing something
wrong, come tell us. We want to do the
right thing."
Laine describes how the abandoned
well fund was active prior to the 2008
recession and used the interest it accrued
to pay for plugging contracts. However,
since the fund principal was not expended
during one fiscal year, state accountants
declared it inactive, which allowed it to
be tapped for other purposes. In the years
since, the fund has managed to keep up
by using bond forfeitures and temporary
abandonment fees. Without raising the
severance tax, the state could divert some
of that revenue from the state general
fund to the abandoned well fund, Laine
remarks.
In a report to the association in 2017,
now-retired oil and gas supervisor Burton
said the state increased plugging bond
amounts a few years earlier to recover
from the recession drawdown. He also
restated the reporting requirements and
bond amounts operators must observe.
In addition to a well plugging report
on form CN-0217, operators must file a
reclamation plan using form CN-0692
within 30 days of plugging and abandonment.
Well plugging bonds are based on
well depth. Single well bonds drilled:
·
To 2,500 feet are $2,000;
·
From 2,501 to 5,000 feet are
$3,000; and
·
Deeper than 5,000 feet are an
additional one dollar a foot.
Blanket bonds cover as many as 10
wells. For wells drilled to 5,000 feet the
cost is $20,000; from 5,001 to 10,000
feet the cost is $30,000. Blanket bonds
are unavailable for wells deeper than
10,000 feet.
❒
APRIL 2020 79



American Oil and Gas Reporter - April 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2020

Contents
American Oil and Gas Reporter - April 2020 - Intro
American Oil and Gas Reporter - April 2020 - 1
American Oil and Gas Reporter - April 2020 - 2
American Oil and Gas Reporter - April 2020 - Contents
American Oil and Gas Reporter - April 2020 - 4
American Oil and Gas Reporter - April 2020 - 5
American Oil and Gas Reporter - April 2020 - 6
American Oil and Gas Reporter - April 2020 - 7
American Oil and Gas Reporter - April 2020 - 8
American Oil and Gas Reporter - April 2020 - 9
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